Chairman Gordon's Floor Speech on H.R. 3819

Mr. Speaker, I rise today to speak in strong support of H.R. 3819, a bill to extend the current commercial space transportation liability regime.

First established by Congress as part of the Commercial Space Launch Act Amendments of 1988, the commercial space transportation risk-sharing liability and insurance regime has been extended four times since its original enactment.

The current extension expires on December 31st of this year, and it is thus important for Congress to act now so that there is sufficient time for this legislation to make its way to the President before the current authority expires.

The liability and insurance regime that would be extended by this legislation is three-tiered, and was originally modeled on the Price-Anderson Act that governs liability risk-sharing with the nuclear power industry.

Under the regime, commercial space launch providers licensed by the U.S. government are required to purchase third-party liability insurance to compensate for maximum probable losses from third-party claims, up to a level of $500 million.

For claims above those maximum probable losses, the U.S. government may pay successful liability claims up to $1.5 billion [in 1989 dollars] above that insured level, subject to funds being appropriated by Congress for that purpose.

Finally, for successful claims above those amounts, the licensee assumes responsibility for payment.

To date, not a single dollar has had to be appropriated by the U.S. government to pay third-party claims, but the existence of the liability risk-sharing regime has enabled the development and sustainment of a commercial space launch industry in the U.S., including the emergence of several new companies in recent years.

In addition, the regime has allowed U.S. companies to remain competitive with their international counterparts, almost all of whose governments provide similar or more generous risk-sharing liability regimes to that of the U.S.

I should note that in the Commercial Space Launch Amendments Act of 2004, we directed that there be an independent review of the current risk-sharing regime to see whether or not it was working and whether it was still needed, and that review was completed in 2006.

I think a number of that review’s findings bear mentioning here today, namely:

“Private liability insurance capacity remains fragile and far below what would be needed to compensate for government indemnification if it were eliminated.”

“Foreign competition has increased, and all credible international competitors have risk-sharing schemes rivaling or surpassing that of the U.S.”

“The current regime has become the industry standard. Its elimination could send the wrong signal to international customers and competitors and would be a negative factor in the competition for global launch business.”

“Any alternative that involves government subsidies or increased oversight would cost more than the current regime.”

In sum, the commercial space transportation liability and insurance regime has worked, has not cost the American taxpayer a single dollar in claims payments to date, has strengthened U.S. competitiveness in commercial space launch, and is not a blank check since any potential claims payments would be subject to prior Congressional appropriation,

The bill before us today extends the liability risk-sharing regime for a period of three years.

While that is less than some in the industry would like, I believe it is an appropriate length.

As Members may know, there currently is debate on the potential role to be played by would-be commercial providers of crew transportation to the International Space Station.

At present, no such commercial crew transportation systems exist.

Before a meaningful decision can be made on the potential role of commercially provided crew transportation in meeting governmental needs, important policy and safety issues will have to be addressed.

The most optimistic projections of would-be commercial providers are that it will be at least three years before such crew transportation systems could be developed, and many independent observers argue it will be longer than that.

Thus, the duration of the extension contained in this bill is limited so as not to prejudge the outcome of the deliberations on those policy and safety issues or to take a position on the role to be played by commercial crew transportation systems.

Mr. Speaker, in closing, I would like to thank Ranking Member Ralph Hall, Space and Aeronautics Chairwoman Gabrielle Giffords, and Subcommittee Ranking Member Pete Olson for cosponsoring this legislation with me.